October 7, 2021Calculating...

First things first: Ontario Superior Court confirms presumptive right to pre-certification motions

In Dufault v. Toronto Dominion Bank1, the Ontario Superior Court confirmed for the first time that under new section 4.1 of the Class Proceedings Act (CPA), pre-certification motions that can dispose of the proceeding in whole or in part, or can narrow the issues or the evidence must be heard before certification subject to certain limited circumstances.

The enactment of section 4.1 marks a stark departure from the prior approach to the sequencing of class action motions in Ontario, which often resulted in courts refusing to permit such motions to be heard in advance of certification. In Dufault, the Court confirmed a legislative presumption in favour of pre-certification motions signaling an emphasis on procedural efficiency, speedier resolution of class actions, and the avoidance of costly certification motions where possible.

What you need to know

  • Under section 4.1, defendants in proposed class proceedings have a presumptive right to have pre-certification motions that can arguably dispose of the proceeding in whole or in part, or can narrow the issues or the evidence, heard and decided before certification.
  • Plaintiffs can displace a defendant’s presumptive right by demonstrating that there is nonetheless an overarching and good reason for a pre-certification motion and the certification motion to be heard together.
  • The Court in Dufault set out two “good reasons” for refusing a defendant’s request for a pre-certification summary judgment motion:
    • the defendant’s motion does not raise any genuinely arguable issues that can narrow or dispose of all or part of the litigation and appears to be a delay tactic; or
    • the defendant’s motion does raise genuinely arguable issues that can narrow or dispose of all or part of the litigation but the existing or proposed dates for the certification motion and the summary judgment motion are sufficiently close that it makes sense to hear the motions together (i.e., where a certification record has been filed and the certification motion would be heard a few months later than the pre-certification motion).
  • While section 4.1 creates a presumptive right to pre-certification motions, the Court in Dufault noted that the judicial discretion preserved in the provision may be interpreted more broadly by some judges.
  • Under section 4.1, Ontario’s approach now differs from the approach to pre-certification motion sequencing in other jurisdictions such as British Columbia, Alberta, Saskatchewan, Nova Scotia, and in the Federal Court. In those jurisdictions, no presumption exists. Rather, a list of factors relevant to the exercise of the court’s discretion is considered in the specific context of each case.

Ontario’s prior approach

Prior to the enactment of section 4.1, the scheduling of pre-certification motions was governed by the previous version of section 12 of the CPA which provided that “the court, on the motion of a party or class member, may make any order it considers appropriate respecting the conduct of a class proceeding to ensure its fair and expeditious determination and, for the purpose, may impose such terms on the parties as it considers appropriate”2.

While the general principle was that certification ought to have been the first procedural matter to be heard and determined, in Cannon v. Funds for Canada Foundation3, the Court set out a non-exhaustive list of factors relevant to the exercise of the court’s discretion to schedule pre-certification motions under section 12, including:

  • whether the motion will dispose of the entire proceeding or will substantially narrow the issues to be determined;
  • the likelihood of delays and costs associated with the motion;
  • whether the outcome of the motion will promote settlement;
  • whether the motion could give rise to interlocutory appeals and delays that would affect certification;
  • the interests of economy and judicial efficiency; and
  • generally, whether scheduling the motion in advance of certification would promote the "fair and efficient determination" of the proceeding.

The party bringing the scheduling motion had the burden of demonstrating why the court’s discretion should be exercised.

The decision in Dufault

In Dufault, the Ontario Superior Court interpreted section 4.1 for the first time since it came into force on October 1, 2020. The defendant in the proposed class action filed a motion for summary judgment requesting that the action be dismissed before certification. The plaintiff asked that the two motions be heard together.

The proposed class action alleged that the defendant bank improperly charged multiple NSF fees on a single rejected payment or bounced cheque. The defendant submitted that the plaintiff’s claims had no merit and that a summary judgment would narrow or dispose of all or part of the litigation. The Court agreed, finding that the defendant’s motion raised genuinely arguable issues that could narrow or dispose of all or part of the litigation and was not merely a delay tactic. In addition, no certification record had been filed nor had the certification motion been scheduled.

Legislative intent of section 4.1

The Court reviewed the legislative history and intent of the newly enacted provision before applying it to the defendant’s sequencing motion. The Court noted that section 4.1 originated from a recommendation in the Law Commission of Ontario’s Final Report on Class Actions. The LCO recommended “that courts support/endorse pre-certification summary judgment motions or motions to strike if such a motion will dispose of the action, or narrow the issues to be determine or the evidence to be filed at certification”4.

The Court also quoted from Attorney-General Doug Downey’s speech to the provincial legislature outlining the reasons for the section 4.1 amendment, which highlighted that a key reason for the amendment was the expensive and time-consuming nature of class proceedings which “use valuable court resources” and can involve “significant financial and reputational risks for Ontario businesses”. The Attorney General explained that the need for section 4.1 was to alleviate pressure on Ontario businesses as “[I]t is expensive and time-consuming for businesses to defend class actions that are dormant, that don’t have merit, or can’t be resolved in a reasonable amount of time”.

On this basis, the Court concluded that section 4.1 had a clear legislative intent: “if a pre-certification motion can arguably dispose of the proceeding in whole or in part, or can narrow the issues or the evidence, the motion must be heard before certification, unless the court orders that the two motions be heard together”5.

Finally, the Court noted that despite the language in the provision signaling the legislative preference, the provision maintained a measure of judicial discretion. While the Court in Dufault interpreted the provision as a strong legislative signal of the presumption in favour of early motions, it remains to be seen how widely the judicial discretion is interpreted going forward.

Onus on plaintiff to shift presumption

The Court established that a defendant has a presumptive right to have certain motions heard and decided before a certification motion, but also maintained some judicial discretion. A plaintiff can displace the defendant’s presumptive right by persuading the court that there is “nonetheless an overarching and good reason for the two motions to be heard together”6.

The Court set out two “good reasons” for denying a request for a pre-certification summary judgment motion:

  1. the defendant’s motion does not raise any genuinely arguable issues that can narrow or dispose of all or part of the litigation and appears to be a delay tactic; or
  2. the defendant’s motion does raise genuinely arguable issues that can narrow or dispose of all or part of the litigation but the existing or proposed dates for the certification motion and summary judgment motion are sufficiently close that it makes sense to hear the two motions together.

Approaches in other jurisdictions

No other province’s class proceeding legislation has a provision akin to Ontario’s newly enacted section 4.1. Rather, in other jurisdictions, the exercise of the court’s discretion in scheduling pre-certification motions mirrors Ontario’s prior approach. To that end, the courts in other jurisdictions, including British Columbia7, Alberta8, Saskatchewan9, Nova Scotia10 and the Federal Court11, have all adopted some version of the Cannon factors to be considered when exercising judicial discretion in scheduling pre-certification motions.

While the courts in some jurisdictions, such as British Columbia and Alberta, have stated there is no presumption that certification motion ought to be the first procedural matter to be heard, the approach in other provinces differs. For example, in Saskatchewan, a “certification first, with exceptions” approach exists that is similar to Ontario’s prior approach.


To discuss these issues, please contact the author(s).

This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.

For permission to republish this or any other publication, contact Janelle Weed.

© 2022 by Torys LLP.

All rights reserved.
 

Subscribe and stay informed

Stay in the know. Get the latest commentary, updates and insights for business from Torys.

Subscribe Now